Government Presses Fraud Case Against Indian-Owned Gold Firm

By Emil Danielyan

Radio Liberty, Czech Rep.
Aug 2 2007

Prosecutors pressed on Thursday fraud charges against Armenia’s
largest, Indian-owned gold company, in a move that will likely speed
up its takeover by another foreign investor.

The Office of the Prosecutor-General said it has formally asked the
country’s Economic Court to strip the Ararat Gold Recovery Company
(AGRC) of all operating licenses and fine it almost $22 million for
tax fraud and other violations of the law.

The development follows a criminal investigation that has forced AGRC’s
owner, Vedanta Resources, to put the company up for sale. The company,
which develops Armenia’s largest gold deposits, has stood idle ever
since prosecutors raided its offices last January.

AGRC’s Indian top executives have rejected the charges as baseless
and accused the Armenian government of illegally forcing Vedanta to
leave the country. Vedanta is already looking for buyers for its
Armenian subsidiary, which it had purchased in 2002. The Russian
financial-industrial group Promyshlennye Investory is reportedly
close to gaining ownership of AGRC.

It is not clear if the takeover can be formalized before a court
ruling on the lawsuit brought by the prosecutors. The latter also
want the Economic Court to freeze AGRC assets worth the amount of
the demanded compensatory damages pending a verdict on the case.